Senate Standing Committee on Business, Professions and Economic Development

All right. Thank you very much. This is the joint sunset review oversight hearing for the Senate Business, Professions and Economic Development and Assembly Business and Professions Committees. We're going to bring the meeting to order for today's hearing. Public comment may be provided on each program being reviewed. Upon conclusion of questions from the Members of the committees, we're going to get started right away. We have a lofty agenda, and the Chairman and I both have afternoon obligations with session and leadership. So it's Monday.

We're going to do the best we can here, but thank the Members for joining us, and I'm sure some others will trickle in and out the best that they can. This is the first of two sunset review oversight hearings this year. These hearings provide an opportunity for us to evaluate the effectiveness of regulatory programs and to determine whether changes in the law or in their operations or functions are necessary at this time.

Today, we will review issues pertaining to the California Board of Accountancy, the California Architects Board and Landscape Architects Technical Committee, the Cemetery and Funeral Bureau, the Bureau of Security of Investigation and Services, and the Contractor State License Board. Just a couple of small things. All right. These regulatory programs are subject to legislative review. We'll sunset on January 1 of 2025.

So our conversations today and moving forward will inform our collective work to determine necessary improvements or statutory changes should the Legislature decide to continue the operations of each entity. To assist in the review and evaluation of each agency, Committee staff prepared background papers which identify issues and make staff recommendations for each program. Want to encourage everybody to take a look at those. These papers are available on the Committee's website and made available to interested parties.

Let us know if you have a hard time finding those and we'll be happy to help you out. Each program will provide a very brief overview of their functions. Members of the Committee will have an opportunity to raise any other issues or questions which they may have, and we'll also have the opportunity to hear from consumer groups. Many of you are here. Thanks for joining us today, professional organizations and members of the public.

For each portion of today's hearing, I'd like to invite my colleague, Assembly Member Chairman Berman, from the Assembly Business and Professions Committee to make some opening remarks as well.

Thank you so much, Chair Ashby. I'm really looking forward to partnering with you and your Committee staff throughout this important process. I agree that sunset review is a very important component of our roles as BNP Chairs in our respective houses, and I'm confident and I know that our goals in this process are aligned. As legislators, we're essentially responsible for balancing two key priorities: identifying unnecessary barriers to opportunity while at the same time ensuring that consumers are protected when they receive services.

And I look forward to the discussion today and definitely also want to thank staff from both committees for all the important work that they've been doing over the past couple of months to get us to the point that we're at today and tomorrow. With that, turning back over to the Chair.

We have really good staff.

We do.

We're very, very lucky, and we're good friends. So this is going to be fun. It's going to be a fun year for us. We're looking forward to it. We're going to begin today with board Member Katrina Salazar and Dominic Franzella, the Executive officer of the California Board of Accountancy. Want to welcome everyone and have you all come forward, get started. Welcome.

Thank you.

All right, get us off on a good note here. Okay, you guys, that's your job. Get us started here with some positive momentum. Thanks for being here.

Is this mic on?

It sounds like you are on and ready to go.

Fantastic. Well, Chair Berman, Chair Ashby, esteemed Senate and Assembly Committee Members, good morning and thank you for the opportunity to speak with you today. My name is Katrina Salazar. I am a current member and the former President of the California Board of Accountancy, often referred to as the CBA. I am also a certified public accountant. CBA President Joe Rosenbaum is out of the country and so is unable to be here today with you, but he does send his regards.

With me today to testify is CBA Executive Officer Dominic Franzella. So on behalf of our board members and staff, it is my pleasure to be here today to discuss our sunset review report with you. We do believe this is a valuable process to help ensure that the CBA continues to stay focused on its mission of consumer protection, ensuring that only qualified licensees practice public accountancy in accordance with established professional standards. That mission truly does guide all that we do.

For more than 120 years, the California Legislature has entrusted the CBA with protecting the public related to the practice of accountancy in our state. Today, the CBA regulates more than 115,000 licensees, including individuals and accounting firms. Many of these firms have national or even worldwide footprints. Certified public accountants, or CPAs, like myself, work in a wide range of settings, including academia, government, private industry, and accounting firms, and these CPAs provide a variety of services to clients and employers of all sizes throughout our state.

The CBA recognizes the scope of its regulatory influence and the protection of the public shapes its regulations, policies, licensing and enforcement decisions. Highlights of some accomplishments that you will see in our sunset review include that consumers can now submit online complaints against licensed or unlicensed individuals or accounting firms, and we found that this new option has really streamlined the process for consumers as well as the board.

Licensees can now submit online renewal applications, continuing education information, address changes, and payments, all in one convenient online license renewal process called CBA Connect. Candidates can now submit applications online, which we found to be a really big time saver and benefit for our applicants. So these automation efforts, as well as other ones also under development, are expected to continue to improve the experience for our candidates, licensees, and consumers.

I'm also pleased to report that the CBA continues to meet its goal of reviewing examination and licensure applications within 30 days, processing more than 700 applications every month. We have also greatly expanded our outreach program over the past few years, so we have CBA members as well as staff that collaborate with various stakeholders to ensure that there is a robust year round outreach to different groups in order to help candidates and licensees understand how to become a CPA as well as how to maintain their licensure.

Of course, these are just a few of the ways that the CBA has improved its protection of consumers, service to licensees, and engagement with stakeholders. So I thank you for that and would like to turn the floor back to the Chairs, and we're happy to answer any questions you have. Thank you.

Thank you very much. Appreciate it. You ready?

I am here to answer any questions.

Just questions you have. Any other comments? All right, look at you guys. This is how it's done, people. Do it just like this. All right. Thank you so much then. Thanks for being here. I'm going to turn to my colleagues and see if there are any questions from the Members for the Board of Accountancy. Senator Roth?

Well, just a quick one. I was reading the background material and noticed the discussion and an issue having to do with retired status licenses, and it occurred to me to ask why, if you do have an inactive status license as opposed to retired? And if not, why not? I happen to be a lawyer. We have inactive status licenses. California, unfortunately, my other state, Georgia, has an emeritus license. I guess that's for retired people, but California doesn't. But we do have inactive.

Actually, I can answer that question. I authored the legislation. I am a CPA, and if I use the title, I have to put RET in parentheses because I am inactive. And so that was just the designation that was arrived at in the legislation. I worked with the society on that, but the term retired means inactive in the context of the legislation. You were looking at me when he was asking that question. Did you know that I authored that legislation? You remember? You did? Very good. Thank you.

Is there anything in there that you guys wanted to address? Okay. Thank you. Anybody else from the Committee?

That's great. Thank you, Chair. So I noticed in the background paper that there have been some instances where the Board hasn't been able to establish quorum due to vacancies on the various legislatively established committees that are comprised of volunteer licensees. What does the Board determine? What's the cause? What do you all think are the causes of these vacancies? And what more can the board do to attract volunteer licensees to sit on these committees? And do you think the vacancies are preventing the Board from carrying out any of its consumer protection missions?

Thank you, Chair Berman. So again, it is just the legislatively established committees. The board itself has been able to meet and not had quorum issues. And in the quorum issues we had, one was back in 2019 and two early in 2023. So we're hopeful they're being resolved at this point. But we have done a concerted effort to encourage extensive outreach and recruit new members. We have a recruitment video online. We do active social media posts. We have it posted to our website.

We have a recruitment packet that helps our current members share with colleagues at their firms or for Cal Society to also be able to use. We discuss opportunities at our outreach events, and we run issues in our update publication that goes out three times a year. So we are very active in the recruitment. And we actually have some Committee Members, some new positions coming to our board at the meeting next week.

Oh, great. Great. And then one more question regarding the kind of open investigative CPA and supervising investigative CPA positions. Really, are there any legislative changes that might be helpful to fill these really important positions, and if so, any suggestions that you have?

So, yes, these are very important positions, and I appreciate that. And they are difficult to recruit for recruitment and retention. But the CBA does still believe that the resolution lies with the kind of the current process established by CalHR. The CBA actively works with the Department of Consumer affairs on those pay differentials and recruitment issues. And however, we would like the opportunity, if something were to ever arise, to be able to approach the Legislature, if that need ever comes up.

Don't hesitate. And is the Board keeping track of the number of enforcement delays that have resulted, if any, from these vacancies?

We don't track it in that particular way, but we do prioritize those technical cases because those are the ones that are the higher risk for us. And through cross training, case management, utilizing one of our legislatively established committees, the Enforcement Advisory Committee, to help us out, as well as we've done some out of class recruitment for certain staff to help us in those positions, we've been able to manage that workload, I think, fairly efficiently.

Great. Thank you very much. Turn it back over to you, Chair.

Thank you very much. Good questions about recruiting and vacancy. I just have one last question for you. How's the current practice privilege for CPAs working in California? And more importantly, does the Board have any challenges or enforcement issues with CPAs licensed in other states who temporarily want to practice in California?

So, all in all, I think the Mobility Program is an excellent program. I think it's a great example of how cross border practice can work for licensed professionals from an enforcement side. We have not run into barriers or issues.

We've taken enforcement actions on several occasions against out of state licensees who are either practicing in this state with a principal place of business which would be outside the scope of what mobility would allow for who are advertising in this state inappropriately or have actually performed work that was subpar. So I believe it's an excellent program.

Agreed. It appears to be an efficient model. Thank you very much for your participation here and with the questions. Any other questions from Members? Okay.

Thank you, Madam Chair, and I'm sorry I missed some of your presentation, but you provided such great information for us to prepare. In your report, you talked about a decline in candidates pursuing this licensure and how it leads to longer hours for those who are licensed and accounting errors in some cases. And I'm curious what you're doing to attract sort of new pools, particularly minority women, pools of workers who could actually step into this profession. Are there any targeted investments to recruit those folks who are underrepresented in the sector?

Please.

So thank you so much for that really important question. I think it really combines the importance of diversity as well as the pipeline challenges that we have. And so I would maybe take a two pronged response to that and would share with you that the Board is very aware of both the pipeline issues which relate to a decrease in candidates who are pursuing their CPAs. That is something that's happening nationally as well as within the State of California.

And also the Board has a strong commitment to DE&I issues. So, in fact, at our prior strategic plan, DE&I was woven into it. And one of our values today is that the CBA supports and encourages a variety of perspectives, backgrounds, and experience that benefit its operation to meet its consumer protection mandate.

And so the Board is very, through our Executive officer and the staff, working with our stakeholders, has done a very wide ranging set of tasks to ensure that we are encouraging pipeline issues as well as promoting diversity. And that's everything from messaging priority in 2024, which is growing audience diversity. There's a new video that's been created on diversity, equity, and inclusion in the CPA profession that will be launching this month.

We're also really focused on meeting our stakeholders where they are so not just our licensees, but also the students that may someday become candidates. So the Board has been very active on social media, posts outreach events at college campuses. Our one just last September was at Cal Poly Pomona, if I may say the name. But that's particularly exciting because not only did we hold a Board meeting there, but we were able to engage with faculty as well as students. Staff came to review transcripts.

We were so excited to be able to help students understand that they'd actually met some of them, had met the education requirements and were ready to proceed. So again, that's important, because not only is it an important institution, but it is a Hispanic serving institution and one of the top 25 undergraduate programs providing baccalaureate degrees to Hispanics. And so again, I think that there is a robust focus in offering outreach reflecting the diversity within our committees as well as our Board.

And even just last year, there was an update, which is our newsletter profile on one of our leaders, current chair of the Enforcement Advisory Committee, Kathy Johnson, who is a member of the Alliance of Black Women Accountants. And so again, we make sure that we are featuring and providing opportunities for discourse and also for people to see the diverse leadership that we have. So it's an ongoing process, and there isn't one small answer. But we continue to track pipeline. We are very aware of diversity, and I'm excited about the things that you'll continue to see from our Board in these areas.

Wonderful. And how do you track that? Is there data that allows us to see our progress in that direction?

Well, that is an interesting question because the Board does not track the demographics of its licensees. In terms of pipeline, though, we do know nationally the candidates that are going into the profession. So, for example, in 2013, there were approximately nationally 42,000 individuals who were pursuing a license. In 2022, that dropped closer to 30,000. The CBA annually looks at long term licensee trends and looks at initial candidates, and that's where we're seeing the decline. So we work very hard in case you're wondering.

Those numbers are also going down for first time candidates sitting for our exam in California. But we work very hard to make sure that we're modeling and providing opportunities to CPAs that are reflective of the state population.

Thank you for mentioning the Alliance. And there are dozens of accounting affinity associations and groups, and I'm hoping that they are your partners. And it's incredibly difficult to improve what we don't measure. So my recommendation is that there are some internal metrics for seeing sort of the point of departure for the Board and where you're hoping to get to in terms of your DE&I goals. So thank you for that update. Looking forward to future reports.

Of course, you can name the school. Any chance we get to brag on our universities in California is welcome this Committee. All right, thank you, Members. We will now accept testimony from members of the public related to the Board of Accountancy. So we're just going to have you come up to the mic here and ask everybody to succinct and brief. And no need to mention too many things have been mentioned before you. Welcome.

Jason Fox with the California Society of Certified Public Accountants. We're the Professional Association that represents CPAs across the state, from small accounting firms to large international firms, business and industries, government, different organizations of different sizes. We have a healthy working relationship with the Board of Accountancy. We're an active participant in CBA discussions and activities. We regularly collaborate on efforts to promote CPA profession and ensure consumers receive quality accounting services from licensees that they can trust.

We coordinate on regulatory initiatives to enhance the licensure framework, striking a balance between the rigor and streamlined entry into the profession, both at the national level and as well here in California, working with the constraints. We have an outreach, as you heard, with schools and students, and different efforts specific to the D&I question. Those are some of the metrics that we do track from a profession standpoint.

We have a D&I Commission that looks and does research specific to that and kind of try to track some of the progress and efforts along those lines. We work to promote awareness within the profession about the new laws, regulations, other professional standards governing the practice of public accountancy, and we coordinate on the development and refinement of relevant and practical regulations, including maintaining fair and consistent enforcement standards. With that, we're strong supporters of the Board of Accountancy. We would encourage the continuation of the Board's sunset date. Thank you.

Thank you very much. Anyone else from the public wishing to speak on this item? In a surprise to no one, the accountants were measured and consistent and timely. Thank you very much. Having heard from everyone, I'm just going to take a quick check of my board here. Everybody seems fine. Thank you very much. We appreciate your time.

Thank you.

Thank you.

All right, we're off to a good start.

Yeah. Impressed.

All right, me too. All right, we're now going to move to the California Architects Board and the Landscape Architects Technical Committee. First we will hear from Charles Ward III, Board President, and Laura Zuniga, Executive Office for our discussion from the California Architects Board. Welcome you both here. Thank you so much for being here. We'll do the same process as we had before. Please introduce yourselves and we'll get started.

Hi, good morning. Can you hear me? Okay, great. Good morning. Thanks for having us, Senators and Assembly Members and Chair Ashby and Chair Berman. Appreciate you having us. I'm Charles Ward, President of the Board, currently serving as President of the California Architects Board. With me is Pamela Brief, Chairman of the Landscape Architects Technical Committee and Laura Zuniga, our Executive Officer. I'm pleased to be able to provide an overview of the Board and Ms. Brief will do the same for the Landscape Architects Technical Committee.

The Board consists of five architects and five members. We were established in 1901 and have a rich tradition of preventative, innovative programs to protect consumers. We license approximately 21,000 architects, have a budget of approximately 5 million, and a dedicated staff of nearly 30. To protect Californians and ensure that our buildings perform appropriately in our complex, challenging practice context, our licensing standards are robust but reasonable.

We require eight years of training and educational experience in architectural work, which includes a structured training experience program consisting of nearly 4,000 hours across six practice areas. Candidates also must pass a 6th division national exam. Finally, in recognition of California's unique seismic energy accessibility, fire prevention, and legal standards, we administer a California supplemental examination to assess candidates' ability to safely practice in our dynamic context. One component of our standards that we are particularly proud of is our multiple pathways into the profession.

A professional degree in architecture, a related degree and associate degree, or five years of experience can all meet the Board's five year requirement for education or experience or combination thereof. In addition to consumer education, the Board works closely with professional groups to ensure that architects understand changes in laws, codes, and standards. All of these initiatives underscore the Board's firm belief that it must be both strategic and aggressive in employing the preventative measures necessary to effectively protect the public health, safety and welfare.

Since our last sunset review, we are in the process of transitioning to a new IT system, Connect, which will provide a greater range of online services to licensees and consumers. We implemented a new CE requirement in zero net carbon design as required by AB 1010 from 2021. With that, I will ask Ms. Brief to provide the overview for LATC.

Thanks, and good job on all coming up together. That's great. That's helpful. I should have introduced you, but please introduce yourself.

And thank you for bringing the pencil behind the ear.

I think that we are really talking to architects just in case we forgot who we were talking to. It's a really great signals to us.

Thank you Chair Berman and Chair Ashby and Committee Members. My name is Pamela Brief. I am the Chair of the Landscape Architects Technical Committee and have served on the Committee since October 2020. The LATC is responsible for the examination, licensure, and enforcement programs concerning landscape architects.

Landscape architects are the licensed design professionals who shape the natural environment by utilizing the expertise in science, specifically natural systems, and design, for the preservation and human use, in a manner which protects the public health, safety and welfare. Last year, landscape architecture was officially designated a STEM profession which recognized the high degree of science, technology, engineering, and mathematics work required in its practice. We're very happy about that. The LATC is a five member technical Advisory Committee to the board consisting of landscape architects.

The Board of Landscape Architects, BLA, was created by the California Legislature in 1953, and the LATC was later established in 1997 to replace the Board of Landscape Architects. To protect Californians, our licensure standards require a total of six years of experience and or education. In addition, candidates must pass a four section national exam along with California supplemental exam to assess the candidate's ability to safely practice in today's dynamic environment. We are proud to say that California offers multiple pathways to licensure, including an experience only pathway.

We license approximately 3,700 individuals, have a budget of 1.28 million, and a dedicated staff of five. We also have external contracts with landscape architect consultants for our enforcement program to assist with the technical review of cases involving professional practice issues. The LATC also uses state licensees in the development and testing of the California Supplemental Exam. Landscape architects offer an essential array of talent and expertise to develop and implement solutions for the built and natural environment.

They routinely address climate change and biodiversity and use their expertise in resilient and sustainable design to mitigate the consequences of these ongoing crises to protect public health, safety, and welfare. As with the Board, the LATC has found that acting preventively and proactively is the best use of its resources.

Some things that we have accomplished since our last sunset review we have transitioned to a new version of the National Exam, which included expanding access to the exam for all candidates to take any division of the exam if they have an accredited degree or have a certificate from an approved extension program along with a four year degree. Before, they were only allowed to take certain sections. It has opened it up now for them to choose as they wish.

Implementation of a new IT system which will enable us to provide improved online services to licensees and consumer and better assess licensure statistics. We have successfully implemented the requirement to fingerprint candidates for licensure. And last year we adopted a new strategic plan. I want to thank you for the opportunity to testify today, and we would like to turn this back over to the Chairs. And we are happy to answer any questions you might have.

Do you want to add anything?

Just answer questions.

Just here for technical questions. All right, well, thank you very much. If you come from a local government like me, then you absolutely love your landscape architects. They help you build all those beautiful parks. Sacramento is full of them. So thank you very much. I'm going to turn to the Members now. You guys, questions for the California Architects Board or the Landscape Architects Technical Committee?

No, thank you very much. I just had a follow up question similar to the one I asked the previous presenters. But I'm really curious about the experience only pathway. I just wanted you to elaborate a little bit more on that. Coming from LA County, we have some amazing master gardeners landscape. I would call them architects, but because of language and other barriers, they might not have access to the actual accreditation. So I'm curious, what is this experience only pathway and how does it work?

The experience only pathway allows an individual that is practicing under a licensed landscape architect and practicing in the landscape architectural realm to use those years as experience, since they're getting tutored, so to speak, by someone that is licensed. And we do have, as you said, those distinctions between what a licensed landscape architect is able to do in the State of California and what a landscape designer is able to do within the state. So there is some differentiation in that. But I hope that answers your question.

It does. And that brings me to the question about how do we bring marginalized communities into professional, higher paying ways. My interest is always, what are the pathways out of low wage, unregulated jobs that perpetuate poverty and the steps to actually get certified and into a career. So I'm curious, in that example of a landscape designer who may be Spanish speaking, who may be immigrant status, what are the ways that you all are envisioning? How would we bring folks from that skilled and lived experience into the accreditation and professional realm? And are you thinking about things like that?

Yes.

I'll speak a bit, if that's okay. We're definitely thinking about it. First of all, I'll say that the Senate Rules Committee and the Assembly Speaker and the Governor have done a wonderful job of elevating different kinds of voices on our Board. So I think our Board makeup at the top is a beautiful reflection of the population of the state, which is a good starting point. We're also, as a Board, elevating the voices of architecture and what it takes to become architect.

We're showing up at schools, both universities, professional full year colleges, but we're also going to community colleges and elevating the voices. I've been spending time at our Board Meetings elevating voices of the population of California. So first of all, as a gay man of two adopted children, I'm elevating our voice. We're elevating NOMA, the National Organization of Minority Architects, and we're also elevating civic engagement discussions and how architects can communicate and engage with underserved communities. We're also reducing barriers. So we're in the trenches.

We're lowering initial and keeping our initial registration fees low for initial applications, which is instead of increasing barriers, we're keeping them the same and we're studying lowering them. We're counting community college years equal in experience to more expensive full year, 4 and 5 year professional degree education. So that's a small snippet of the work, and it's definitely forefront and at the center of the work that we're doing.

And I'll speak to the landscape architectural realm, very similar to what Charles has said. In addition, we have the National Association of Minority Landscape Architects, NAMLA, as they are called. And that is an organization that works closely with the ASLA, the American Society of Landscape Architects. In addition, we have, in the State of California, I'm proud to say we have a university under the UCLA extension program.

There is a landscape architectural certification program that the LATC does recognize, and that is essentially for people that need to work while they're obtaining their degree. So I think that could speak directly to your question. And we do have landscape contractors and landscape designers that enter into that program, and it's a great way for them to receive a degree and then go on to their license should they wish to seek that.

Thank you very much, and I look forward to working with you on that. We have two very active and utilized community college programs.

Oh, that's exciting.

And our LA Trade Tech does work with day laborers, for example.

And I've been at certain events with LA Trade Tech. So I know a few of the people as we've been doing some charrettes around town and stuff. So. Yes, absolutely. I would love to speak to you more about that.

That's great. We're going to go to Assembly Member Jackson and then Senator Roth.

Thank you very much, Madam Chair. Can you tell me more a little bit about your rate of applications? Are you seeing a rise, a decrease? I mean, are there any trends that you're seeing?

It remains, sorry, Laura Zuniga, the Executive Officer for the Board and for the LATC. In both programs, it's pretty consistent. It goes up a little bit each year, but we haven't seen a decrease or a significant increase. So it's pretty steady.

And so there's no workforce issues in the field?

We haven't identified any at the Board level.

Okay. Thank you.

Thank you, Madam Chair. I'd like to talk just briefly about interior designers and the certified interior designer. And the certified interior designer with commercial designation. I read the background paper, of course, and noted that there apparently are issues where certified interior designers or those with commercial designation are having difficulty obtaining acceptance of the stamp that they receive when they're certified, when they submit plans to local building officials.

And the backgrounder notes that existing law only provides local building departments the option to recognize the CID stamp at the department's building officer's discretion. Wonder if you could comment on that and if you see that as an issue and what you think we can do about it. I have a suggestion, but I'd like to hear from you first. Any takers?

Sure. We're definitely aware of the issues of acceptance of plans at the local level. We've had lots of discussions with interior designers about that and have some sympathy as our licensees, particularly landscape architects, can have a similar problem even though they are licensed at the state level. The Board is happy to work with the Legislature on this issue. If there is an interest in pursuing licensure or any combination or additional regulation and placing it at the Board, we're happy to help in any way we can. But I think there are certainly some issues that need to be worked on further.

I think one of our concerns is regulating one portion of the interior design field over others. There's a concern that it could create confusion for consumers and further complicate the issues with building and safety departments.

But don't we do that anyway in this building and professions code, section 5800 that talks about the scope of practice for the certified interior designers and the certified interior designers with commercial designation. I mean, it specifically defines those people who prepare and submit non structural or non seismic plans, et cetera, et cetera. You're more familiar with it, I'm sure, than I am. So you have specifically carved out a type of work that falls within this certified commercial interior design, correct?

Yeah. I'm going to let our Executive Officer speak to the history of that piece of legislation. It's outside the Architects Practice Act, and it's not something that the Board deals with.

Yeah, I'm actually not that familiar with how the determination was made, but I would say where we think there could be confusion in the proposal that we've seen is that it retains the commercial interior design certification and then creates a license or registration for commercial interior designers.

Which proposal? I'm talking about the code.

Okay. In the code, yes, there is a designation between commercial and residential. So that isn't the issue where we see confusional changes.

Not to belabor this where I'm going, and it would really apply to landscape architects as well who are licensed. I'm sure you have a similar section that defines your scope of practice.

So my question is, and I listened to this conversation about stamps and who accepts them and who doesn't, and when the code defines a scope of practice, I guess my question is, why shouldn't we put in the law that the local building officials shall accept a stamp when the certified or licensed individual is practicing within the scope outlined in the business and professions code? Wouldn't that address the issue?

Yes.

We don't have a concern with that.

Okay. That's it, Madam Chair.

Great. Anyone else, colleagues? Any other questions?

Maybe one quick question.

All right.

It seems like the rate of reserves is dropping. It's projected to be about two and a half months in 2024, 2025. Can you speak to that issue a little bit whether or not you have concerns and thoughts on what to do about it?

Yeah, the Board did implement a regulatory fee increase last July for the initial and renewal application, so that will help somewhat. We did have the department's budget office perform a fee study for us since we were going through sunset review. It seemed like a good opportunity so we can present the results to the Committee and to staff. We think that we will be okay for a few years, but towards the end of the decade, we might be in need of a fee increase.

So we do have a proposal for a statutory increase so we could adopt regulations at that time. We do try to be conservative in our spending, but definitely our IT costs in the last few years, switching to the new system, has had an impact on our reserve.

Thank you very much.

Okay, one more from Senator Smallwood-Cuevas.

Yeah, I'm sorry, I have one more question because I think we talked about the fingerprinting question, and I just wanted to clarify the licensing process for formerly incarcerated individuals. We were trying to get some sense of data from that and I wasn't sure. Is there an issue collecting some of the data in terms of barriers, particularly for this population? If you could just say what the process is for formerly incarcerated people and how are you able to track that data?

Yes, offhand, I'm not aware that we have any problems. For both programs, we do fingerprint new applicants. I'm thinking in the time since the last year, since we implemented the requirement, I think maybe we've had one conviction return that required some additional review. So we haven't seen it as a barrier to this point, but would be happy to provide some additional information on exactly what we've gotten back.

Particularly for women. We were trying to understand more what some of the barriers might be and if formerly incarcerated women in particular are having a tougher time being able to access the licensing process.

Okay, I just have one quick follow up question to Chairman Berman's question, which is I just want to know how you all feel about whether or not funds could benefit both agencies with merging the Architect Board with the LATC under one regulatory body, meaning would shared resources, including personnel and other potential benefits make that a clear operational choice?

Sure. I definitely think there are potential for savings if we did combine a little bit. We run both programs in the way they're structured. They are separate. I serve as the Executive for both programs, but they're independent staff for both programs, separate meetings. So we could definitely see if there are some efficiencies either to do on an informal basis or if there are changes. But LATC has been having conversations. The Board hasn't really had that conversation with LATC yet, so we'll pursue that.

No time like present. It's a good opportunity. All right. Just a good idea to look at operational efficiencies.

It started on the plane here.

Perfect. All right, great. All right, I'll take you off the hot seat then. All right, let's see. Having heard from all my colleagues here, we're going to turn to the public and see if there are members of the public who'd like to comment as to the California Board of Architects and or Landscape Architects Technical Committee, welcome.

Thank you. Chairs and Members, Jason Ikerd, on behalf of the California Council of the American Society of Landscape Architects, we represent the 3,700 licensed landscape architects in the State of California and we're very supportive of the sunset extension of both CAB and LATC. Our licensure is really important. I apologize. Landscape architects licensure is very important. We exist at the forefront of a lot of important issues: wildfire mitigation, access to open space, mitigation of excessive heat, et cetera.

And so it's really important that there's a rigorous process to make sure that the professionals who are actually working on these issues are ready to do so. So we're very supportive of sunset extension. Want to talk about two issues that came up today.

First, with respect to the question raised by Senator Roth. Briefly on the prospect of licensing, interior designers don't have a ton of specific thoughts on the merits of that, but do want to speak to the fact that your staff have raised really good questions about this on page 18. And we think that there are a lot of good questions to it.

And we frankly think that that actually might be an issue more appropriate, respectfully, for a standalone bill considering that issue, rather than a sunset extension review that's supposed to be about the current performance of the Boards and their makeup and their recommendations for improvement. So we think that this just may be more appropriate as a separate issue. Lastly, on the question of the merger that Chair Ashby just raised, like you just heard, studying this is a part of the strategic plan of the LATC going forward.

We're not fundamentally opposed to the notion of a merger as CCSLA. However, there's a real need to understand the economic and consumer protection impact of doing so. I don't think that we have an analysis in hand yet that does that. Until we do, we think that that conversation may be a little bit premature.

Again, not that we are necessarily opposed to doing it, but that there's a lot of open questions about the constitution of what that board would look like, how it operates, and again, the consumer protection, and economic impact. So again, apologies for my longer comments. Appreciate the opportunity to be here today. Very supportive of sunset accenture for these two organizations. Thanks.

Thank you so much for your comments. Any other members of the public who'd like to speak beside them? Welcome.

Hi. That's loud. Hi, I'm Ellen Brittingham. I'm here on behalf of the International Interior Design Association. We represent commercial interior designers, about 1,500 members across the state. First, just really want to thank staff for meeting with us on our issue, issue number two, and for the excellent background on commercial interior design profession.

We look forward to working with CAB stakeholders on exploring maybe CAB's potential role in helping to elevate design professionals like ourselves to best serve the public. So thank you.

Thank you.

Hi, I'm Melissa Pacey, and I am the incoming President of IIDA, which Ellen just mentioned. And like Ellen, I just want to thank you all for your time and interest in the issues that's very well outlined in the background that interior designers are facing in California. We're really excited to collaborate with you all and with CAB to bring some consistency to our practitioners, our clients, and our building officials. So thank you.

Thank you very much.

Thank you, Madam Chair, Mr. Chair and Members. I am Carina Mills, First Vice President President Elect for the American Institute of Architects, California Chapter. We represent over 11,000 architects and design professionals in California. We do support the sunset extension for the Architect Board, and thank you to President Ward and Executive Director Zanik Zuniga for your leadership. We believe it's a model board that functions well and we celebrate their diversity. I would like to speak today to Items Two and 12.

Item Number 12: the Architect and Training Proposal of the American Institute of Architects, California proposes a change to the Architect Practice Act, current terminology candidates for those eligible for the ARE to include voluntary use of the title 'architect in training.' By formally recognizing those committed to becoming a California licensed architect, we believe this change will distinguish those eligible to test, which is a significant milestone.

We believe that recognition of this effort will help encourage those on the path to licensure to stay on that path, thereby increasing licensure, as well as supporting our ongoing efforts to increase diversity, equity, and inclusion in our industry. Additionally, the change may advance the public's understanding and awareness of architects profession by appropriately acknowledging the abilities of licensure and non-licensed track professionals and appropriately aligning these individuals with their esteemed career path colleagues, including engineering, land serving, and geologists who do have an in-training designation.

The Committee report acknowledges that we have run this once before in 2016, and since that time we have made a few adjustments to the proposal that we will believe will make it easier for the architect sport to implement. On Item Number Two, pertaining to interior design industry, we have a few just high level comments. First and foremost--

Going to need you to be really succinct.

Sure. Just first and foremost, we support the thriving industry of our colleagues. We believe that the proposed changes need to have a full collaboration and agreement before moving forward. We're open to the evaluation of what the best governance and oversight model looks like, and we have just concerns about the interior design designation, as it was mentioned, potentially confusing to the consumer.

The title has been defined, but the practice of scope has not, in regulation, and we're concerned that the two separate titles and two separate oversight entities could create confusion, and there's no such distinction exists in engineering architecture, landscape architecture, so thank you.

Thank you for your comments. All right, those of you lined up to speak, we're going to ask you to be as succinct as possible, and no need to repeat the things that have been stated before you. Go right ahead.

Good morning. I'm Kathryn Hampton, and I'm a certified interior designer with a commercial designation. I'm also a CCIDC board member, and I have taken and passed the NCIDQ exam. During my 37-year career, I've also been a registered interior designer in the State of Texas and a licensed interior designer in the State of Louisiana, my home state.

There is no difference in the ability to practice the scope of work as a certified interior designer with a commercial designation in California than a registered interior designer in Texas or a licensed interior designer in Louisiana. In March of 2020--I am a small--

Ma'am, we have way too many people and way too many topics.

In March of 2020--

Tell us the punchline.

Let me just read. It's very quick. In March of 2020, I was doing a law firm in San Francisco. Everything stopped. All my projects stopped. If I did not have experience in a variety of project types such as residential, I would be out of business. Certified commercial interior designers already have permitting privileges. I have successfully pulled permits in Los Angeles, Orange County, and Long Beach. There is no guarantee that anyone's plans will be approved. The approval of plans is subject to the individual building officials. This proposal to separate interior designers into residential and commercial makes no sense. How do you define residential versus commercial?

All right, we'll take your points. Appreciate it very much.

Thank you.

Thank you for taking the time to come and testify. All right, welcome.

Good morning. I'm Linda Panattoni. I'm an interim director for the California Legislative Coalition for Interior Design. I support the sunset review for the architects, but I do not support Article Two, any provisions in the interior design certification other than what is provided by CCIDC.

Great. Thank you very much. Welcome.

Hello. Roze Wiebe, Executive Director for CCIDC. We have a program that works, and as long as we work together, it will continue to work. Thank you.

Thank you.

Good morning. Patricia Johnson. I'm a public board member of CCIDC. My background is in plan review, fire and life safety. Fire marshal at UC Davis for many years. I would like to say that I also oppose this motion. I think everything's working very well under CCIDC, and I would like to not see it changed.

Thank you. Thanks for coming today. Welcome.

Hi. My name is Caroline Veerman. I'm an independent designer in California. I'm here to support the architectural sunset review. I'm here to oppose the amendment of the commercial interior design license because there is not a public demand for a change. Thank you.

Thank you for your comments.

Hi. My name is Jay Hyde. I'm a licensed architect and also a California certified interior designer, commercial status. I also am working with SVABO, the Sacramento Valley Association of Building Officials, and CALBO, the California Association of Building Officials. So code is my expertise, and basically I'm here to support both the Architects License Renewal Act and also to speak against enfolding the interior designers into the Architects Act. Thank you.

Thank you for your comments.

Good morning. Steve Jones, practicing certified interior designer in Sacramento for 36 years and submitting plans that you get submitted for permit, and like the previous speakers, I'm here to support CCIDC. Thank you.

Thank you. Thanks for coming down today. Hi.

Hi. Andrew Mendoza, on behalf of the California Building Officials, and I just wanted to provide that we're a resource and that we're looking forward to collaborating with all involved. No specific comments on any of the proposals right now.

Great. Thank you very much, and thank you for being here. Thank you all for being here, and thanks for bearing with us on helping us stay on track and on time. I appreciate it. We all want to hear from all of you as best we can. All right. I want to thank the panel, and it looks like the Committee is good, so we are going to keep moving.

Thank you so much for being here today. We're going to move on to the next topic. We're going to now hear from Kimberly Kirchmeyer, who is the Director of the Department of Consumer Affairs, Gina Sanchez, Bureau Chief, and as we begin our discussion of the Cemetery and Funeral Bureau. Welcome, ladies.

Good morning. Thank you very much.

Good morning. All right. Help us keep it going.

We will. We've got some exciting things to talk about.

Let's do it.

Good morning, and thank you for having us here today. Good morning, Chair Ashby, Chair Berman, and Committee Members. I would like to first thank you for the opportunity to be here to discuss the Cemetery and Funeral Bureau. I would also like to thank your staff for their diligent work on the well-written background paper materials that they've prepared for us here today and for the hearing. The Bureau regulates nearly every aspect of the cemetery and funeral industries.

The Bureau licenses and regulates 14 different licensing categories in funeral establishments, funeral directors, embalmers, apprentice embalmers, cemetery brokers and branches, cemetery salespersons, cremated remains, disposers, crematories, crematory managers, hydrolysis facilities, cemetery managers, and private nonreligious cemeteries that collect endowment care funds. In addition to the oversight of the operational activities within the death care industry, the Bureau also has fiduciary responsibility of over three billion dollars in consumer-funded trust funds held and invested by licensed funeral establishments and cemeteries.

The Bureau adopted a strategic plan in 2019, which spans from 2019 to 2023. The strategic plan established goals and objectives that furthered the Bureau's mission of consumer protection through proactive education and consistent interpretation and application of the laws governing the death care industry. The Bureau is finalizing its next strategic plan, which will span from 2024 to 2028.

Important consumer protection legislation was implemented by the Bureau since its last sunset review, including AB 651, which increased the minimum dollar amount that must be deposited into a cemetery endowment care fund--trust fund, and allowed a county to assume responsibility for the maintenance of a cemetery if the cemetery manager of a private cemetery has surrendered their license or has had their license suspended or revoked.

In addition, SB 1443 increased the Bureau's fees in order to allow the Bureau to remain solvent and continue its mission of consumer protection through licensure and regulation of the death care industry. The Bureau has also adopted eight regulatory actions since its last sunset review. Over the past two years, the Bureau has been heavily involved in the development of a new IT platform: CFB Connect, which went live in May 2023 with the availability of an online funeral director application.

The Bureau is actively working towards the release of additional applications and expanded functionality to increase efficiencies and eliminate barriers. These are just a few of the improvements the Bureau has made since the last sunset review. Here with me to talk about the Bureau and answer questions is Bureau Chief Gina Sanchez. Chief Sanchez will continue with information about the Bureau.

Thank you, Director Kirchmeyer, and good morning, still, Chair Ashby and Chair Berman and Committee Members. So over the past five years, the Bureau has effectively enacted legislation to enhance consumer protection for both cemetery and funeral trust funds, introduced a new form of disposition after thousands of years called alkaline hydrolysis, and consistently achieved our performance matrix in licensing and enforcement with minimal exceptions.

Because of my dedicated and talented staff, the Bureau also successfully navigated the challenges posed by the pandemic, highlighting the critical role of the regulatory oversight program who supports the death care industry, safeguards consumers, particularly regarding essential services, storage, licensed embalmers, and ensuring families' loved ones were treated with dignity and respect during a time of great worry and sorrow. The Bureau has also identified new trends that pose risk to the health and safety of consumers and the communities in which they live.

As many of you have seen in recent news events, news reports, the future of abandoned, unlicensed cemeteries and the management of their endowment care fund has become a concern of many consumers. As cemeteries reach their capacity and have little to no options for expansion, owners face limited business opportunities. This can lead to the cancellation of a license, abandonment of the cemetery, or potentially license revocation for violations of maintenance or non-reporting of the endowment care fund. This presents two significant challenges within our communities.

First: the existence of dedicated burial land with no one to take care of it, and second: the need for the protection of the endowment care fund to secure its perpetual use once the licensee is no longer present. At the center of these challenges, of course, is our California consumers, often left with more questions than answers, fighting for their loved ones' final resting place and facing more loss.

The Legislature has established a comprehensive set of laws within the Cemetery and Funeral Act, governing endowment care and the regulation of private cemeteries. Nevertheless, the act lacks for situations where a licensee is no longer leading the cemetery.

The Bureau looks forward to working with the committees during the sunset review to develop new laws on when to engage city and county partners when communities are faced with abandoned cemeteries, and to add clarity to statute to ensure that the Bureau safeguards ECFs until a licensee is appointed or until it can be transferred as a public or pioneer cemetery to the city. Thank you for this valuable opportunity to share the Bureau's achievements as well as work together to face our challenges. I look forward to answering your questions.

That was a really good presentation. Thank you so much.

I'm going to turn to my colleagues. Yes?

Thank you.

Was it good because it was quick?

No, it's good because can't you just tell they actually really care about this topic so much? I love it.

Thank you for the presentation. Last year, I introduced a bill that would have allowed private cemeteries to allow co-burial of pets and deceased pets and deceased humans, and other states like New York and Virginia and Florida already allow this. California does not. We did work with the Bureau to shape the language. Given the prevalence of this issue over the last few years, are you able to speak about any work that the Bureau has done, and are you able to do this without legislation?

Thank you for that question. Yes. So the Bureau has not taken any formal positions on proposals regarding co-burial of human remains and pet remains. Therefore, I cannot make any recommendations. However, I can mention that any decision should really strike a balance between respecting the rights of those who are already interred there and respecting the rights and preferences of those pet owners as well, while still addressing concerns of hygiene, aesthetics, religious beliefs, and cultural sensitivities.

So these considerations are essential for Coca burial practices and ensure they're conducted with dignity and respect, which I think we addressed a lot of that in the last round. We're always willing to provide technical assistance, and we had very successful discussions with your team. Your team is amazing, very easy to work with, and we're open to working with them again. The Cemetery and Funeral Act is very specific to human remains.

The entire act is filled with specifically saying 'human remains,' human remains, and even defines remains as human remains. So I don't think this can be done without legislation, but, of course, we're always willing to work with your team again.

Thank you.

Yes, thank you.

All right. Senator Eggman.

Thank you, and thanks to your dedicated and hardworking team that prepared your talking points for you, too. I have two areas of questions. One: in 2017, AB 967, Gloria, as you outlined, how many hydrolysis facilities are there now? We just had one previously. Have any more applied, and what's the process for that?

Okay. There is still only one hydrolysis facility issued, I believe, in January of 22, I believe, located in Escondido, California. That is the only one currently licensed at this time. We have not gotten additional applications. I think one may be coming, but hydrolysis, there's three entities that have to approve a hydrolysis facility within a community. First is the city or county.

They have that discretionary oversight as to whether they will allow that facility within their city or county and also designate whether the pH balanced affluent, after the process is done, can go down the sewer or be removed by hazardous waste. Secondly, CDPH and the Bureau has already established their regulations on what requires for approval. So it really starts at that city and county to make sure they're allowing that within their community. Same as the funeral establishment crematories. Most of our licenses have to be approved by the city first for decedents.

Okay. And then human composting. Now, we gave you to 2027 to get those regs up. How are the regs coming to be able to license facilities coming online?

Yes. Thank you. The reduction of human remains will be coming in January of 2027. The Bureau fully anticipates to be able to issue licenses by then, and we've actually already started the groundwork. So we have established a relationship.

Is that a pun?

No, but yes. Now pun is intended. We've already established a relationship with CDPH, with the scientists there. This is very similar to hydrolysis, as it will require city and county approval, again, CDPH to approve the Chamber and then Bureau approval. So, like I said, established relationship with CDPH. The Deputy Bureau Chief and I have also traveled to Washington State, and we got a tour by that regulatory entity of their three licensees that are already performing reductions. So we got to see the process, which I think is really instrumental in helping bring it to California.

Thank you very much.

Thank you.

Good updates. All right. Senator Archuleta?

Yes. Thank you, for your information. Lively subject.

I love it. We do this a lot at the Bureau, so we have to keep our spirits up there, you know.

It is Monday, but my question pertains to religious cemeteries, private cemeteries, smaller ones, and of course, the public ones, and the oversight by the Board. Tell me how you work them all together.

Yes. Thank you. Great question. Of the thousands of cemeteries that are located within the State of California, the Bureau only regulates 192. It was specific within the act that the Bureau only oversees privately-owned cemeteries. Although they're privately owned, they're still open to the public. So it's not my own private cemetery. It's still open to the public. So those are the 192 overseen by the Bureau. The other ones that have oversight would be the public district cemeteries.

There are several federal cemeteries, obviously, veteran cemeteries, native burial grounds. The only ones that do not have an oversight type program would be the religious cemeteries within the state. Although they're not regulated by us, every funeral establishment is. Every funeral establishment is, and many of those cemeteries have a funeral establishment on-site or one they deal with. So we are present, at least at that part of it when someone is dealing with a religious cemetery not under our jurisdiction.

So that would be the safety mechanism that--not the Board--but I guess with the regulations they have to adhere to?

Yes, their own. Their own regulations. So it's very important. That's what we try to portray a lot in our outreach, is to really research who you are doing business with. Licensee, non-licensee. When you're dealing with a cemetery, look up their history. How long have they been there? Speak to the cemetery manager. Those are the kinds of things we put also in our consumer guide that funeral establishments are mandated to give to consumers when they start discussing.

Thank you. Madam Chair.

You're welcome. Thank you.

Good question, Senator. All right. Yes.

Thank you, Chair. Abandoned cemeteries: so my understanding is that the Bureau suggested putting the mandate on cities and counties to take care of these cemeteries, and it's been argued that it was local government that zoned the land for that purpose. At the beginning, how would this proposed change in law be affected and has there been any discussion with local governments about how they'd respond to such a proposal?

And a question I asked my staff, with not enough time for them to give me an answer is, what do other states do? We can't be the only state dealing with this issue. Are there other states that have any kind of regulatory frameworks that seem to be working?

Yes. Thank you for that question. I am part of a national regulatory association group, so I do know a lot about other states. Come to find out not even every state regulates cemeteries. So that's very interesting to me that I found. And other states actually have a separate entity that will take a state entity that will take over those cemeteries. So they all kind of vary between state to state, and we have to see what works best for this state.

Abandoned cemeteries: a cemetery is forever. Private businesses, as we know, are not. So when a city or county is making that designation as to this piece of property is going to be for the burial or internment of decedents and then have a private entity oversee it, we can't guarantee that private entity is going to be around forever. So that is where the issue comes up. Once a licensee is no longer over a cemetery, the Bureau's jurisdiction is very, very limited. We're also a very small, small bureau.

What we can do is we can conserve that maintenance fund that each consumer must make a deposit into, protect it until there is an entity that comes over the cemetery. So in assistance to the cities and counties, a part of my proposal is to be allowed to turn over that endowment care fund to the cities and counties for their use to maintain the property in perpetuity.

It is the intent of the Legislature for these pieces of property to not become a place of desolation and reproach, which that does become in cemeteries specifically. So although the act did not prepare for this, this is a trend that is new. This is something that we are filling up those cemeteries that were around in the 1800s and 1900s, and they're deep-seated into communities so they cannot buy extra land and grow. So we do need to find some sort of solution.

Although I haven't had this specific discussion with the cities and counties, they are very involved and we do have several discussions during the process as this happens. So they are very aware of the issue and I'm looking for a solution that will benefit all.

Thank you for that. Two more quick questions. One on reserves. I know that you recently received a pretty significant fee increase but project that reserves are going to be about three months this year or 23-24 and projected to continue to decrease. And there isn't a lot of buffer there. Decrease. Can you talk a little bit about ideas that you have to strengthen your reserves?

Absolutely. So the fee increase that was recently implemented was the first fee increase the industry had seen in 25 years. So it was a pretty significant increase to begin with. It did project us to be solvent up until 28-29 was the 21 proposal, and working closely with my budget staff, the department's budget staff, we do expect that trend to stay about the same, mostly because we are historically conservative in our spending. We don't typically spend out the budget to its full extent each year.

Additionally, other costs that would be reflected in a fund condition that would remain the same, we are expecting those to go down like IT costs from CFB Connect, et cetera.

Gotcha. Thank you very much. And then does the Bureau work with industry and stakeholders to ensure that licensees are in compliance with the current process for unclaimed, pre-need funeral arrangements? And has the Bureau heard any feedback from industry or consumers about unclaimed property with respect to the escheatment process?

Yes, the escheatment bill, that was a great bill carried by State Controller's Office a few years ago. That was one of the last industries that did not require escheatment, so it's very--I'm very happy that that's happened because once a funeral home closed, there was a trust fund for pre-need funeral arrangements that just kind of sat there and waited till somebody called and we said, 'okay, where do you need this to go?' So this really provided some great legislative framework.

The audit team has already included it in their annual audit reviews, and the industry has been very successful in reporting those escheatment processes and what they've done in those annual reports. So we do think that has been quite successful.

Thank you.

Great. Thank you so much. A lot of information there. Okay, we're going to turn to the public now and see if anybody in the room has testimony they would like to share for Cemetery and Funeral Bureau. Welcome.

Morning, Chairs and Members. Jerry Desmond with the Cemetery and Mortuary Association of California. It's comprised of members that are the Certificate of Authority regulated by the Bureau, and also some of the religious cemeteries and some archdiocese throughout the state. And, of course, we support the continuation of the Bureau, believe it's doing an important job to protect consumers, and have a couple of perspectives on a few of the issues that are raised in the background paper and in the testimony.

Maybe start with that, abandoned cemeteries, because I believe that's the key issue that we're facing now for several years and currently are as well, with difficult solutions to address, to identify. We've been supporting as the industry, the increase of the monies that are paid in as a minimum statutory increase into the endowment care funds. We also, with Assembly Member Irwin carrying the legislation, to modernize the investment so that there's a net income distribution method for the endowment care funds that allows them to grow over time.

We've also worked with the Bureau to implement the maintenance standards, and if you look at the last set of laws that have been enacted through all of you, there are some tools to identify up front when a cemetery is problematic before we get to abandonment. By the time we get to abandonment, what we're finding is that it's a walk away situation. There's hardly any money in that endowment.

There might have been the money is taken out of the endowment care fund and used somewhere, but they're gone. That's why we're not having cities and counties step in because it would be a budgetary issue if sometimes another cemetery looks at helping and taking over, but what we don't have in the law is an ability of that cemetery to have a cut off on liability trail to say if we step in, we're not responsible for what happened in the past.

But if we also look at the maintenance standards can be what the Bureau identifies when it goes out and inspects every property every year, what do they identify in those maintenance standards? What's that heads-up that we're getting? And then if there is a problem with the funds, what can we do before the license is expired? And then also if we're looking at the investments, we believe that professional investment managers are critical.

With the way to grow an endowment care fund over time, we believe that industry serves an important purpose and needs to be continued in their role, which is voluntary. It's not mandatory on a cemetery today. So we are together engaged with the identification of possible solutions, but realize it's a really difficult challenge. The second issue is if we talk about hydrolysis, when we were supportive of the legislation, what we're finding locally, but they don't want to identify localities, they aren't approving it because of the discharge requirement. They have to get that local permit.

And there's some ick factor in some communities that I think are causing that to occur. When we talk about pets and Assembly Member Irwin's bill on pets, as the Bureau mentioned, the key issue there is for our cemeteries that already exist, the folks that are already there and what the understanding of those families are. So we've emphasized, and it's been included in the legislation, it has to be a new, real separate section of existing cemetery if we're going to do that and plus the funding for the Bureau.

If we talk about another issue that's not quite on the agenda because it's not quite in the Bureau's jurisdiction, it is crematory emissions--and crematories are emit into the air and get the local permits from the local air districts, and there is a district in Southern California that's a lead district throughout the state, Southern California Air Quality Management District--and they adopted a rule two years ago almost now that cut in half the maximum emissions from a crematory retort.

And by cutting them in half, they figured that the manufacturers could manufacture to that standard. Well, we've identified the three manufacturers. We've identified the manufacturer of the burner in those retorts, and they're not available, and we've been trying to work with South Coast Air District for two years, and I just testified a Friday ago about the inability to buy new retorts that are at the end of their life that have like a 2025 year existence. And we need to.

The reason I'm raising it now is because in the event we have another terrible pandemic like Covid and we don't have retorts, we're going to have a huge problem. 70 percent cremation rates throughout the state growing. People have bought them in advance. They've purchased with pre-need that they're going to have a cremation at the end. We have a number of facilities that have held off on replacements. Other districts have adopted the rule because South Coast often leads the way.

Okay. We hear ya. Do you have a final point you want to make on that?

Sacramento actually changed its mind. Instead of lowering them, they realized the manufacturers weren't available and they moved it back to 60. So we appreciate that. Whatever we do, work with the Committee to highlight that issue to get a short-term fix on that.

Thank you.

Okay.

Great. Thank you. Thanks for your comments. Thanks for being here today. Hello.

Good morning, Madam Chair, Mr. Chair. Chris Micheli, on behalf of SCI California Funeral Services, the largest operator in cemeteries and funeral homes. We appreciate the firm but fair engagement and regulation by Chief Sanchez and Director Kirchmeyer. We share the concerns of our Association, CMAC, and look forward to continued engagement with the committees, but particularly your staff. Thank you very much.

Thank you very much. Okay. Looks like that's it from the public. Just checking my Committee Members. Sounds like we are good here. Thank you both so much. That was really a lot of information and knowledge. Appreciate you very much. All right, we are going to move on and Ms. Kirchmeyer staying with us, right? All right, good. Hang out. Make yourself comfortable. All right.

And joining you will be Lynne Jensen, the Bureau Chief, and Sam Stodolski as we begin our discussion of the Bureau of Security and Investigative Services. Thank you guys so much for being here. We're doing great so far. Help us keep going.

All right. Well, good morning, again. I'm just going to jump right in. The Bureau regulates a total of six practice acts and issues licenses, registrations, certificates, and permits related to alarm systems, locksmiths, private investigation, private security, repossession, and firearm and baton training. Since the Bureau's last sunset review, Lynne Jensen was appointed as the Bureau Chief in 2019, and the Bureau created an Assistant Bureau Chief position and appointed Sam Stodolski in 2023.

The Bureau adopted a strategic plan in June 2023, which spans from 2022 to 26, and identifies strategies for enhancing the Bureau's core regulatory functions of licensing and enforcement, as well as stakeholder outreach and employee satisfaction. Important consumer protection legislation was implemented by the Bureau since its last sunset review, including AB 229, which expanded the initial training required for all security guard and proprietary security officer applicants, as well as the training for the carrying and use of firearms to include appropriate use of force topics.

The regulations implementing this legislation went into effect in November of 2023. In addition, SB 607 amended the law on firearm assessments for guards to require them to pass the assessment prior to applying for a firearm permit, which reduced the financial burden on both the Bureau and the applicant. This has extremely improved the licensure process and resulted in a significant decrease in cases referred to the Attorney General's Office.

The Bureau, via its outreach efforts, including speaking at conferences and Advisory Committee meetings and through LISTSERV email distributions, has encouraged applicants to apply online to promote processing efficiencies. Additionally, the Bureau has updated the online company applications to make them more user-friendly, and the Bureau continues to strive for improvements and implements changes when process efficiencies are identified.

These are just a few of the improvements the Bureau has made since the last sunset review, and here with me today to talk about the Bureau and answer questions is Bureau Chief Lynne Jensen and Assistant Bureau Chief Sam Stodolski. And at this time, I'll let Lynne add a little bit more information about the Bureau.

Thank you. Good morning, Chairs and Members. I appreciate the opportunity to testify on behalf of the Bureau of Security and Investigative Services or BSIS on the last five years of our operations. I'd like to briefly outline some of our numbers as we are one of the busiest licensing bureaus in the state. There are currently over 433,000 bureau licenses or permits held by about 350,000 businesses and individuals. The Bureau has approximately 23 different license certificate permit types and has 77 employees.

All of our license types require fingerprint clearance by both the California Department of Justice and the Federal Bureau of Investigations, save one. In fiscal year 22-23 the Bureau received almost 105,000 new applications and renewed almost 126,000 licenses, permits, or certificates. We are a busy bureau and the two permits in highest demand are our Security Guard Permit, clocking in currently at a little over 312,000, and the associated Firearms Permit, which currently we have 41,299.

I was appointed in April 2019 as the last sunset review was nearing its end. Since that time, the Bureau has navigated its way through Covid, a Super Bowl in California, and historic overhaul of how we train security guards. We have instituted weekly enforcement emails to our LISTSERV subscribers with lists of licenses that have been revoked or suspended. We overhauled our website so that it was mobile-friendly and easier to navigate for our licensees that do their business on their smartphones.

The Bureau for the first time hired two special investigators in the last three years, and as a result, our unlicensed activity citations have increased by nearly 300 percent. Looking towards the future, the Bureau will continue to look for ways to improve the professions it regulates while maintaining stringent consumer protection standards. I look forward to your questions and thank you. Thank.

And Sam will not be reading a statement.

Sam Shiro is the expert.

Great Deputy Chief. No statement, though.

Great. Any questions from Members of the Committees for the Bureau of Security and Investigative Services? Starting on my right, going to my left. This is a very quiet group. Why don't I just ask a couple of questions? So I'm going to get to these in a sec. Security guard training requirements. So I understand the bureau is proposing some changes regarding the security guard training requirements. Some significant changes. Will the increased training requirements extend to continuing education related to firearm and baton permits as well?

So thank you for that question. Yes. As the Director mentioned, we did just have one set of new enhanced training requirements go live on December 1 after those regulations were approved. As you know, in the new issues section, we do request even more for initial training. We would also like to work with the Legislature to apply that to continuing education on the other end. So thank you for bringing that up.

Great. And this is an important question that I think applies to a lot of different industries. But because a security guard is typically an entry level position, is it equitable to require a higher level of training and knowledge when wages are likely to remain the same?

And that is a very good question, and I know industry will be here to weigh in on that question as well. It is a delicate balance that the bureau does face, recognizing that its licensees are not among the highest paid licensees in the state. So we do take a look at that. We do occupational analyses, we do outreach, we do stakeholder engagement, we reach out to subject matter experts. We do a lot of intelligence gathering before we actually take a step forward. And so that would all be part of the process if these enhanced training standards that we propose do go forward.

And I just want to add one thing that is a little bit different about this actual bureau than a lot of our other boards and bureaus is that they do some of their hours prior to initial licensure, and then some of them, they do after, once they get that license. So that is kind of one of the things that's helpful for that barrier to entry.

Great.

To be able to, while you learn.

Yes. And the employers are responsible in many cases for providing that enhanced training.

Great. And I sound like a broken record. I'm the fiscal hawk of the Committee, apparently. But talk a little bit about funding and what's the projected fund condition? Should fees be increased to the statutory maximum? Would this be sufficient in sustaining bureau operations, or do you think additional funds might be necessary?

So we are in the process of putting together a fee package a regulatory fee package, and we did the necessary audits some years ago, in 2017 and 2018, we worked with the audit firms to do those audits. We were given authority at that time to raise the fees by 40%. This was back before pre 2020, before my time. It's my understanding those fees were raised at that time by 30%, leaving a 10% ceiling. And that is where we are aiming for.

Our fee package is to raise fees across the board by 10%. Realistically, some of our fees are low, that this would mean maybe a $5 increase, the company fees would be a little bit bigger, but it would be a 10% across the board increase. And as we are projected to go into the red in budget year plus two, this would bring in an additional 1.5 million per year ongoing.

Got you. Thank you very much. And Senator Archuleta.

Yes. Thank you for appearing. I served in law enforcement, so my concern is always the security guards going too far without the proper training and procedures that we had in the Department that all law enforcement have to follow.

It could be bothersome that some of these security guards and others, individuals, private investigators, take on a position of law enforcement that they don't protect the community as they should, and in such a way that they may overstep their bounds with use of force, as an example, techniques, and also things that equipment that may not be up to date, things of that nature. How are you overseeing that? And here's another question: bonding of some sort.

Obviously, if an officer oversteps his bound and techniques are wrong and it's against police policy or municipality policy, county policies, then, of course, they could be sued. It happens all the time. So a private entity, such a security company, may not have the assets to protect that injured party. Is there a bonding situation that restitution is there, if it happens?

Sure, so I'd like to answer that question in a couple of parts. Number one, it is always important to recognize that guards do not have any special rights or privileges. The power under which they restrain somebody is the citizen's arrest power. So, keeping that in mind, we do mandate that each individual security guard company carry a minimum of $1 million insurance for each event per event. So if a consumer is harmed, they have redress and they have insurance certificates that they have on file with the bureau.

Okay, very good. Thank you.

Yeah, go ahead. Senator Menjivar.

Fun fact. I had my guard card when I was 19 years old. So I was a private security. I was a mall cop in a local mall. And I agree with you, Senator. I'm not going to lie. I think we did cross the line sometimes because we were 19 to 26 year olds with handcuffs in our back pocket. And I wish I would have gotten better training. The training I got was in front of a computer.

When I did get my guard card, I had to go in person. But outside of that, any yearly training was just in front of a computer. And then you're out there on your own in your segue or your car doing whatever we wanted to do, honestly. I know it's different now. Times are definitely different when it comes to just any type of law enforcement. Maybe there's just more leeway back there, but I am a little hesitant because of my previous experience, and the leeway we get, the lack of oversight and the lack of supervision in this space.

Sure. So I am happy to say that standards have dramatically tightened, I would imagine, in the years since you have been a guard, but congratulations on your guard card.

It is long expired.

Right. Sure. Easy to renew, though. But I will say.

I don't know if anyone wants me to walk around with handcuffs. Citizens arrest.

Right. So the Legislature took up this issue several years ago and passed a bill by Assembly Member Holden, AB 229, that enhanced training for security guards. And as part of this enhanced training, which we were directed to work with post and other stakeholders, we have mandated a 50% in-person training course. And the emphasis with the new training regulations are on deescalation and use of force and addressing mental health crises. These are best practices in the industry.

And so we are in the process of educating right now after the regs went live and we are also constantly, the deputy and I are constantly going out to stakeholder groups and engagements and making sure that everybody knows that we are watching. And we do require now, as part of our enhanced oversight, is any incident that involves an altercation that turns physical with a member of the public, they must report it to the bureau within seven days. If we find out about it and no incident report has been submitted, that company gets cited and fined.

And again, that is the concerns we have with training. And that is why one of the proposals in the new issues is recommending additional training.

Yes, we want to make it in muscle memory at this point.

Go ahead, Senator Archuleta.

A follow-up question is, my colleague, the other thing is the automobile. The look that it looks like a police car could cause a dangerous situation for those guards who are not trained as law enforcement officers. And they give the general public this impression that they can be waived down, they can be used as police, they can prevent an accident, report an accident, whatever, get involved and so on, that we got to be careful how we allow the labeling that it deviates.

When you're driving, you look to your right and you see a car with black doors and a white hood and trunk. You think it's an officer, but it's a security company. And so are you taking a good look at that?

Oh, yes. That is actually addressed in our statutes. You are not allowed to have a vehicle or appear as private law or as law enforcement. And we have cited a number of companies for too closely resembling law enforcement. We also personally approve every badge and patch submission. I don't know if you're aware, but every security guard must have a badge, a bureau approved badge and patch. We noticed that there was a tendency for some companies to want to try to look like law enforcement.

We also work with law enforcement and have done outreach with the Police Chiefs Association to make it clear to them that if you see a security guard company that resembles law enforcement, please let us know, because we will cite and find them because it is specifically against our regulations and statutes.

And please don't misinterpret my questions, because I think there's a strong need for private security, a strong need for these investigators, and security in the homes and certified licensed people to go and change their lock at home and things of that nature. But I'm also concerned about their safety as well, and you know, the smash and grab and so on.

You have a security guard there that really doesn't have the experience and tries to play the John Wayne role, and it could cause a problem, you know. Their safety is obviously a concern of mine as well. And I thank you for what you do.

Thank you.

Senator Smallwood-Cuevas.

Thank you so much, Madam Chair. And before coming to the State Legislature, I spent some time working with the Service Employees Union, organizing private security officers in the commercial real estate space. And I want to say the training, it was at the time during 911 when there were massive evacuations and they were being told that they would have to do temporary morgues and all sorts of things, and there was no training for them.

And so I have a few questions along the training line, one on private security officers that are on our educational campuses, our K through 12. And particularly, I'm thinking about the high school and middle school, where hormones and teenage spirit result in skirmishes on the campuses, no weapons involved, but just the typical schoolyard fair. Is there conflict resolution, crowd control, deescalation? What in your curriculum is preparing security officers not to bring weapons on campus, and certainly not to always call armed police onto campuses. But what is in the training curriculum that prepares them to deal with the typical kinds of things that happen on school campuses?

Sure. So because Deputy Chief Stodolski has been very involved in this issue, I will kick it over to him for additional information. But are you talking about actual BSIS license guards or school resource officers?

I'm talking about the license guards in some of our schools. It's a private security contract.

All right. Yes.

Good morning. Currently, the business and professions code requires any security guard that's licensed who is on a K through 12 campus to complete an additional set of training specifically in that area. And I believe it's 24 hours worth of training that they have to do, and it includes mediation techniques, deescalation, and working with teenagers.

Is that in person? Where is that? Is it a video? 24 hours? How do they access the training?

So they're going to access that training either through their schools that's going to employ them, or through a school district. We provide the outline in the syllabus for the topics that are included, and it's up to the schools and the school districts to fill in that content because they're the subject matter experts in that regard.

Okay. The other question I have is about weapons. So pepper spray, rubber bullets, beanbags, stun guns, and tasers. Thirteen percent of incidents reported involve some of these weapons. What training do security officers have to deal with those kinds of?

Currently, if you want to carry pepper spray on your person, you are required by the bureau to get a certificate. We do not offer that certificate, but there are plenty of training facilities that do. You must have that certificate on your person at all times. Our statutes also specifically prohibit replica or simulated firearms. So if a guard is carrying a pepper ball gun that looks like a gun, that is against the law. But we are looking at less than lethal options.

And that is one of the issues that we bring up in our request to the Legislature for the sunset is to have further authority over these less than lethal options so that we can have guards who don't either have the choice to be unarmed or carry a baton or a firearm. This would be sort of an intermediate step. We are looking for authority to regulate and issue certificates on their usage.

And what happens in this moment where we don't have any? Is there some sort of reprimand, discipline question about licensing? How do you deal with it now until the regulations are in place?

I will pass that one over to Sam because this is another one that he has been working on the less than lethal options, training and licensure.

So we have current standards and current laws and regs that will address use of firearm, use of a baton. Any misuse in that would be a violation. It could be citable. It can be a cause for revocation. With some of the less than lethal options, such as like a taser, for example, there are no standards, no training requirements, no licensure requirements, and really not a lot of enforcement provisions specific to a taser.

So on an enforcement side, we would have to look at it as, what's the totality of the situation, and is it an unlawful use of force situation that occurred? That was why putting in this proposal, we're looking at at least some standards as far as training, and even if it's modeled similarly to pepper spray, where the facilities are issuing a certificate, we just want to ensure that there's a level of training and competency available with some of these less than lethal options.

Thirteen percent is pretty significant. So for sure, I would love to see that and the progress on what those regulations are and what policies you might need us to step into to ensure that we are protecting the public. My other and final question has to do about the new racial bias training. And I know you recently instituted, want to get a little report on that and to speak on the status of the equity analysis that was included in your 2022-26 strategic plan.

Is this training required? And I'm particularly interested in those areas where the firearm and battalion license exam and renewal is happening. Are we prioritizing those armed personnel for these kinds of trainings?

Right.

And what's the status of the training and plan?

Sure. So the training that you're referring to is AB 229 training. Those regulations went into effect December 1 of 2023. And we definitely have part of the training components and part of the modules in there are deescalation. We have modules in there that address mental health crises, how to identify it, how to deescalate on that portion.

We don't necessarily have a DEI portion dedicated in the new training, but we do have that among bureau staff managers, and we do have that in our strategic plan to roll out to all bureau employees.

Well, I just think it is important for the racial bias training to get to the folks who are actually engaging with community, and particularly those that are armed, and particularly those that are using rubber bullets and pellets and tasers. So I would like to see an update on how is that a plan to incorporate the racial bias training, not just at the management level, but with the officers who are licensed.

The licensees, yes. Well, I will tell you that the new training enhancements, they do go into quite a few of the underlying causes for racial bias, and we do have a very robust curriculum that we put out. Sam and I wrote those requirements, and I don't know if you have anything additional you want to add for those.

Well, I think in looking at the content that we placed into the training manual for security guards, we leaned a lot on what post had as far as cultural competency and stuff like that. So there is an aspect to it. Obviously, it's always something we're willing to explore and update if we need to, but we're trying to provide as much information as we can into an eight hour training. So that's where we're at with the initial side of it.

And Senator, that might be something that as we're looking at this additional training that we're recommending a portion of that be like some of our other boards and bureaus that require DEI training specifically for this license type as well.

Because it was my understanding that it is required and should be in the curriculum according to the AB 229. So I want to understand more about that. And how do we ensure that the racial bias training is instituted and particularly for every licensee.

Good morning all. Thanks all for your time. My name is Frank Huntington. I'm pleased to be the President of CALI, the California Association of Licensed Investigators, the largest licensed investigator association in the world. Our members require 6000 hours of investigative experience to get our license. Many of our members are former law enforcement, insurance people, reporters.

Senator Archuleta, none of our members drive marked cars. That would completely defeat the purpose of our job, so don't worry about that. I'm very pleased to work with the bureau. I'm also on the advisory board, the chief and the deputy chief, and CALI have always been longtime partners and we completely support them. CALI does.

Although there's no state requirement for continuing education for our profession, CALI provides dozens of hours, including DEI training throughout the year for our Members or any PI in the state that wants to take it. Again, we support the bureau. The only one issue I want to bring up is in 2019, SB 385 was passed, which required an enhanced identification for private investigators. The bureau contracted with a company called PSI. Unfortunately, we're having some issues there with the issuance of those identifications and the quality of them.

We are working closely with the bureau to try to resolve those issues and with that, I thank you very much.

Mr. Chair and Members. Charles Wright. On behalf of the San Manuell Band of Mission Indians, we appreciate and strongly support the staff recommendations regarding issue number six, which asks the Bureau of Security and investigative services to advise legislative committees on the existing barriers to licensure for each of the Practice Acts, particularly the Proprietary Security Services Act and Private Security Services Act.

Thank you very much.

San Manuel looks forward to working with programs and these committees to resolve the issues, and we want to especially thank committee staff for working so hard on this. Thanks.

Thank you very much.

Mr. Chair and Members. Frank Molina, on behalf of the Santa Ynez Band of Chumash Indians, like to mimic the previous witnesses' testimony and behalf of the Santa Ynez Band and Mission Indians, in strong support. Thank you.

Morning, Chairman, Members: my name is David Chandler. I'm the President for CALSAGA. CALSAGA is the Association that represents the security industry in California. We are great partners with the bureau. We work with the bureau continuously on training issues that come up all the time, and we're constantly working with the bureau and staff from your offices, also. Ms. Cuevas, I do want to mention that there is cultural diversity that's been around since 2004 in our public relations section.

Thank you.

The chief and the deputy chief have been over regulations so much now that they forget there is a culture of diversity in that section, that all security officers must have training within that first 30 days of their training. So it does cover some training. We would like to get more training for our officers before they go out in the field. Mr. Archuleta, regarding security officers overstepping their bounce, it happens. Police officers do the same thing. That's the problem in our industry.

But with the regulations that the Chief has done and Ms. Kirchmeyer's office has helped out a lot. We have a handle on a lot of it. There are a lot of security companies out there. There's over 25, I believe it was 2500 approximately security companies licensed in California. We also have a lot of unlicensed activity too. The bureau has done a tremendous job in the last few years going after unlicensed activity. And I think that's where a lot of our problems are, is unlicensed activity.

We do appreciate all your hard work, all your committee's hard work, all your staff's hard work, and, of course, the bureau. Thank you for your time.

Thank you.

Good morning. My name is Mark Miller. I'm with Securitas. We employ about 15,000 guards in California. I've been with Securitas for 32 years and we really do enjoy a good working relationship with Chief Lynn Jensen and Director Kurtzmeyer. And I agree with everything that everybody brought up here today.

I recently, last week at my employer, I attended the new use of force training, and it was 8 hours of intensity, all instructor-led, and it does have cultural bias included in it. However, there's always room for more improvement in that regard to your point, yes. My first concern is the safety of the security officer. And at Securitas, our main job is to observe and report, and call 911. Don't touch anybody.

Now, things do happen, and we've had nuclear verdicts before, and so, yes, but the safety of the officer is job one. And to your point, Ms. Javar? Yes. Now, we have instructor-led in the classroom, not all of it, but the training has come a long way. So 40 hours up front and now there's 80 hours annual refresher.

I also want to say on the physical altercations, we have seven business days to report any physical altercation to the bureau and we can receive up to a $5,000 fine if we do not report. I just want to compliment all of you. I want to compliment Lynn Jensen because she processes a lot of licenses applications, and with her going after unlicensed activity, she's helping to make California a safer place. Thank you.

Can I just say on that last comment, I just want to recognize Securitas for lifting standards in the security industry and making sure that we're reducing the turnover in that space and having a workforce that is trained and stable. So just wanted to add that word.

High praise. Thank you. All right, where are we? Chairman, sorry, I had to walk out.

We're done. You're free. Thank you very much.

All right. Well done. Thank you for being here. We do appreciate you very much. We're doing great.

That's right.

We're trucking through here. All right, we are moving to our final program on the agenda today to the Contractor State Licensing Board. Simple, small, little topic. We'll hear from Diana Love, the Board Chair, and Miguel Galarza, Board Secretary, and David Fogt, who's a registrar. Thank you guys so very much for being here. Help us stay on the roll that we're on. Having a great morning so far. Happy to have you here. Thanks for joining us.

Good morning, Chair Ashby, Chair Berman, and honorable Members of the Senate Committee on Business, Professions and Economic Development and the Assembly Committee on Business and Professions. Thank you for the opportunity to speak with you today. My name is Diana Love and I am the Chair of the Contractor State License Board, referred to as CSLB. I am a public member and representative of a senior citizen organization. With me today is Miguel Galarza, Board Secretary. Also representing CSLB is David Fogt, Register of Contractors. CSLB has protected consumers by regulating the construction industry. Since 1929, CSLB licenses more than 285,000 contractors in four license types. That includes 45 license classifications. Through the licensing process, the contractor's knowledge of workmanship standards is accessed, as well as the applicant's knowledge of state law. Since CSLB's last sunset review in 2019, CSLB has successfully maintained operations to provide effective consumer protection and service to licenses. This includes during the COVID health pandemic. Construction was deemed an essential industry.

In response, CSLB changed processes by quickly mobilizing telework to efficiently handle consumer complaints. To timely issue and renew licenses, CSLB launched online renewals in March of 2020, which allowed staff to focus on initial applicants and keep California building. CSLB also saved its fund from near insolvency. CLB's fund rebound through a combination of physical conservancy, strategic hiring, outsourcing examinations, and a small fee increase. The fund is now healthy with an approximate four-month reserve.

On August 1, 2023, CSLB began offering the law and business examinations and nine trade examinations in Spanish. This step was taken to increase the potential to become licensed for applicants whose native language is not English. CSLB will continue to prioritize Spanish exam translations. As a public member representing senior citizens on the board, I have ensured that investigation of elder abuse is predatory. Criminal acts are a top priority for the board.

I will now turn it over to Miguel Galarza to introduce himself and speak briefly about the CSLB enforcement program. Thank you.

Thank you, Chair, Love. My name is Miguel Galarza and I've been a licensing and practicing contractor for the last 30 years. I've been proud to be appointed to be one of the two general contractor members of the board and serve as an honor to make sure and ensure that this industry is perceived as being professional and that we're doing things according to the profession, not only to protect the public but to give them what they're paying for. CSLB has actively and aggressively pursued unlicensed contractors.

By working with other state agencies, we've been able to recover over $29.4 million from issues from the public in restitution and corrective work. That was a 6% increase from the last year. CSLB prioritizes emergency response at locations where disasters have occurred, and we are primarily in making sure that we respond to the consumer and protecting them. With that, I'd like to give you back to the Chair Ashby and Berman.

Thank you. You want to add anything or just here for technical questions?

Just really appreciate being here today and ready to answer questions.

Great. Thank you very much. Okay, I'm going to turn to my colleagues here and see if I have any. Go ahead, Senator Roth.

Thank you. I'm actually going to ask a question for my colleague, Senator Dodd, who could not attend today. But as you all know, in 2022, he carried a bill, I think it's SB 216, to require contractors to have worker's compensation insurance, whether or not they had employees. And his questions have to do with the implementation, the impact of the legislation and response from licensed contractors.

And the questions are these two: have you seen a decrease in the number of licensed contractors in the four disciplines subject to that July 1, 2003 mandate, workers comp mandate, and the second question is: have you seen an increase in complaints about unlicensed contractors working in those four disciplines? And I guess the two questions go to at least someone's suggestion that you're having a decrease in renewals, and contractors perhaps may be electing to go unlicensed rather than comply with the mandate.

So if I understand your question regarding AB 216, correct? Yes. And the workman's comp issue and what we've seen is it certainly is creating a tremendous amount of paperwork. There's been a lot of robust outreach to contractors to make sure they stay, get aware of what the situation is as far as that licensure is concerned. There is some concern that they will be paying for policies that they won't be using those who do not have employees.

However, to your point, those that do have employees or have said they didn't have employees are now being forced to get workman's comp and to the betterment of the community and also to protect the public.

Have we seen any increase in nonrenewals among your group of licensed contractors in this?

I would refer to the...

Yeah. It mirrors what happened when the roofers had legislation to require that all roofing contractors have to have a policy.

We found that we had a decrease in renewals of approximately 10%. So, the answer to your question is we have noticed a decrease in renewals of approximately 8% in those four classifications.

And have you seen a corresponding increase in complaints regarding unlicensed contractors in those categories?

We haven't done a study of that. I can just say that, overall, unlicensed practices remain steady. But that's a very good question that we could research, but we have not done that.

Thank you. Thank you very much. Thank you, Madam Chair.

Thank you. And thank you for helping Senator Dodd, too. Senator Archuleta.

Yes, thank you. And thank you for the work you do. I know the vast majority of people that you work with are very happy, but let's talk about those that are really, really upset. Anyone who's remodeled their kitchen in the last two or three years, you can imagine the nightmare they've had. But I've been very fortunate. Mine went pretty smooth. But what I hear is, contractor after contractor, he'll start a job, get some money, start another job, another job.

So I think that about $42 million is what CSLB does, spends in enforcement to make sure that contractors are doing their job properly. And unfortunately, when fines are assessed, oftentimes there's an appeal process. And when there's an appeal process, that appeal process costs a CSLB about $9,000.

By the time they come back around to you, customers have been sitting there weeks waiting to come back around. How do you propose that these contractors wouldn't be doing that to the consumer, one, and if at the end the work wasn't done right, is there a fund of some sort? We talked about that earlier, that maybe they can complain to someone and then you can send an expert in and say, "Yes, you're right, this isn't right. We'll go ahead and because of our fund, we'll make sure that the consumer is not damaged and take care of it." You see, that consumer-friendly thing that I'm trying to throw at you? Anything in that direction?

Therein lies the conundrum is there's a minimum and there's a maximum fine. And oftentimes when you go in front of an administrative judge, that fine is reduced to the minimum, which is usually $100, which does not cover the cost of these enforcement actions.

So part of the solution would be to ensure that these minimum fines would have not changed in 2007, be adjusted to the cost of living increase to make sure that they keep in par with other costs that are going along with running CSOB properly, number one. Number two, to increase those minimum fines so that they're compensatory to the damage that the contractor has done to the public.

And I think what it is, there's no fear factor from some of these contractors because nothing will get done.

It's $100 fine.

Well, maybe that's something we have to look at. But the consumer, when I mentioned the kitchens, the homes, we just had this terrible weather, rain, roofing. My neighbor just had to put a roof on right in the middle of the rainstorm. Why wasn't he consulted, or somebody talked to him before he tore it down and the rains came? And it was a nightmare for my neighbor. But I just hear these massive stories. But again, the vast majority are top professionals.

They get the job done. So, the general contractor who subs for all these individuals, are they truly under his umbrella, but are they mathematically also on the hook, or is he just a general contractor?

I'm going to let the registrar address that question for you.

Yeah, if I could, just to kind of back up, though, as to the situation where a kitchen remodel is going too slow. What we see as a common denominator when these projects are not prosecuted diligently is the front loading of the contract. This is so important. We're fortunate in California, legislature passed a law. It says home improvement can only take $1,000. There's a deposit. You don't get subsequent payments until that work is performed to your satisfaction.

But what we find with some of the contractors that are receiving these complaints is they've designed a payment method where they get paid well in advance, and they have no incentive to finish that job. So, as our Board Member Miguel Galarza mentioned, we do need to be; we need higher fines. We need to look at contractors that are receiving these multiple complaints. We need to file accusations to suspend and revoke those licenses. And that's something that we're actively performing now.

But I do think the number one reason, the one thing we have to really get across is don't pay in advance of the work. We're going to be reaching out and meeting with the California District Attorney Association on April 29 to get the DA's cooperation with us, letting them know that in some industries, we have to change the marketplace. As you mentioned, most contractors do a wonderful job, but there are some out there that are causing a lot of problems.

And this is also quite prevalent in the solar industry. So that's where we need the help of the DAs. We need to educate our consumers. We need to put information on our website, which we've done to help the consumer to protect themselves and also discourage this type of behavior with our licensees.

It's a great question.

So there's been a decent amount of conversation over the past couple of years around the handyman minor work exemption from licensure. Any thoughts about kind of the proposals that are out there? The situation take us writ large. Asking it as vaguely as possible to let you all know it's stock.

It's something our board has looked at. And a few years ago, there was a proposal that our board supported to raise the minor work exemption.

We're basing it on the consumer price index, and at that time would have raised it up to around $1,000, perhaps a little bit more. We didn't have a lot of legislative interest in anyone sponsoring that bill. And then shortly thereafter, there was another bill that was introduced and it didn't get chaptered. I don't know the exact outcome of it. There's just a couple of things you want to look at when you raise the minor work exemption.

And one is whether or not the work that would be done would require a building permit. Can a permit still be obtained? The other issue would be worker's compensation insurance. And one thought our board had is that if you're going to raise it, maybe not do it in such a way that it's for the handy person that truly doesn't have employees who would need the workers comp. Might be something to absolutely look at.

I know it's something that our board would like to consider in the future. Just always keeping in mind the protection of the consumer and the protection of the worker. Thank you.

Thank you. I have two for you. It should be little lengthy question, but probably not too long of an answer. Just needs a little explanation. This builds off of Senator Archuleta's question about bad actors, but specifically, what are we doing to provide tools for bad actors to prevent them from taking advantage of consumers in disaster areas, obviously California, around fires and other natural disasters, we've really struggled with this a bit, especially when there's such a demand. Are there other approaches or partnerships that could be helpful?

Is there more that we could be doing as legislators or as a state to protect people who are already dealing with so much? Does the board have enough support from local jurisdictions or from us? Or is it mainly state agencies that engage? What can we do?

I want to start off by making just a comment to your question and then let the registrar continue on.

I just want to say that I'm a firm believer of consumer protection, and in the last couple of remodels, so to speak, that I have personally done on the home where I live, I've run into the situation of bad actors, so to speak. And it was refreshing to know that I had the contractor state license board to call and to ask questions of staff what to do. So, I want to commend the staff and the registrar's office.

But in sitting here thinking about and listening to what you're all saying, I think one of the ways that we can help consumers is we do a fantastic job with our website, but I think if we have something that's full-blown when you pull it up, that says if you have questions, call us, don't hesitate. Something that alerts the public so that they feel comfortable.

Because I've been in the situation where money was taken from the contractors where they should not have taken it, and I learned after the fact, and it was too late, and it turned into mitigation and a whole lot of other things. So I just think the alertness of the consumer protection is very important.

Okay. Anything you want to add to that?

Sure. Just regarding the declared disaster areas, we had the opportunity to meet with Senator Mike Mcguire a few months ago, and one thing that was suggested during that meeting is we need to hire a consultant. We need to hire a consultant to see if we have the resources necessary to effectively respond when we have a bad contractor, a bad actor come into the area. So that's something our board has approved. We're hoping to have a consultant in place, hopefully this year.

So that would be one goal. I do think there's a need to consider looking at who's selling these contracts. One of the weaknesses I see is with the salesperson; we can educate the contractor, and we can test the contractor, but we have people out selling these jobs that are often selling the loan as well because that's really unique. You're selling a construction contract, and you're also selling the financing. And that's an area that I think we need to look at a little bit more carefully.

Who is engaging in those transactions at that survivor's home?

All right.

I might add just one quick thought.

Sure.

If you don't mind. In disaster areas, there's a lot of concern. And currently there's a classification called a hazardous life classification, and it only applies currently to underground tanks. And so there's some discussion about incorporating that into disaster areas because, as you know, when you have a fire, it burns everything, and you've got a very bad toxic situation. And we have contractors that do not understand how to remediate and properly mitigate.

You can have cross contaminations into the water, into the air, and to the public that may be still residing in that fire zone. And so careful consideration needs to be added. There's some work being done by CSLB and staff, but when the time comes, that'll probably be appropriate.

All right. All right. Thank you. I just want you to know that we're really interested in, I think it's really important to protect our constituents from further victimization after already suffering such tragedy and loss. Okay.

Madam Chair?

Yes, of course.

It's been a while since I dabbled in the pace program, but I was on one committee or the other around here and had to deal with that a few years ago. I seem to recall in the pace program where we're dealing with contractors, we're dealing with essentially a financing mechanism that there was some separation that they designed into that program. If I'm remembering it correctly, I could be wrong.

You may want to take a look at that with respect to these disaster areas, disaster conditions, where we have contractors coming in, where there's a financing component as well to figure out how to separate the two, whether it's by documentation or some other mechanism. Just a thought.

Absolutely. Thank you.

Senator Archuleta.

Yes. I'm going back to the consumer and getting involved financially or hurt financially. Is there a set amount? You mentioned you pay $1,000, and assuming it's a roofing contract and it's $25,000, wouldn't it be safe to, I guess, open an escrow account and allow a third to go out, a third when it's done halfway, and then finish it up? How do we protect him from what you just said earlier?

Somebody comes in, and a little ladies gives him a check for $10,000, and there's no incentive for him to come back. Is there a standard that it should be divided up into the job?

If I could. One option that's available to contractors in the residential home improvement arena is to get a payment and performance bond. So a lot of the larger contractors, they do obtain these bonds, we do approve them at our board and they can take 100% up front.

But then the consumer would have the ability to go after the bond if there was a problem. We don't see problems with those contractors, but as far as breaking it up, that's absolutely what needs to be done. There's probably an opportunity to do a better job of educating contractors and consumers as to how to schedule their payments. I see that as being a problem. You're going to have a room addition. When do you pay for the foundation? How much is that foundation worth?

You don't pay for it till the foundation is done. But yeah, the more we can do to try to educate both parties, the consumer and the contractor, on how to structure that contract, the better off we're going to be.

Well, I think maybe working with the escrow industry that a minimum fee would be to be able to establish that and have the monies come into the escrow and the escrow distributed upon the approval of the consumer. Right.

And so then there's almost a third neutral party handing out the money rather than that little old lady letting it all go at once. But I guess you've answered my question. There is no set policy but anything the consumer can do. But I do like the fact that the more information you have on your website so the consumer can get involved with you, the board, the better.

One thing that CSUB does fantastic is senior scammers.

I was going to say all of you, in your district, I've had the pleasure and honor speaking to hundreds of seniors and educating them from a contractor's perspective, what to look out for. So, I welcome the opportunity to come to your district and to give your district a frank conversation on how to protect themselves.

The only thing I was going to say was to congratulate or thank you all. Commend you for that, for those events. We do them every year.

They're always one of the most well attended events we have. So really appreciate you all for doing that.

As you can see, this is a hot topic for us. We're interested in more ideas and more suggestions. So, I'm going to move on to my second question because my crystal ball says this might come up from some of the folks behind you.

Does the board have any opinion on whether additional clarification is needed to ensure that contractors in compliance with all of the important provisions of the licensure law, like maintaining a surety bond, providing workers' compensation, and operating a fair legal and ethical manner, have some recourse in the event that they face a small unintentional lapse in licensure or other minor area of noncompliance and are then sued for the sum of a contract due to that lapse?

Yes, the board has taken the approach that has been an issue and was an issue, and the board created a situation being substantially in compliance by doing so if there was a temporary paperwork gap or there were some insurance paperwork that didn't get routed properly. So the intent of the law on this, I believe, is 7031, is to make sure that contractors that are not in compliance, that have no paperwork are severely treated, that they can have all their funds removed.

But there are contractors that have a simple paperwork cap that are being protected. And as a member of AGC of California, I remember this coming up at our board meeting about creating legislation to make sure that public works contractors weren't faced with a city, "Ah, your license is expired. We're going to take all that money back and create a hardship for small business or a large business."

So CSOB has worked aggressively to correct that registered focus.

Just really quickly, just to kind of further what Miguel said. The law was changed a few years ago where we can retroactively renew a license. And that was huge because the license would expire, and then the statute says that you're then unlicensed. So we are able to fix that. That had a huge impact in correcting the problems that we saw. This law is very powerful in protecting consumers that are taken advantage of by someone that's unlicensed.

But certainly, we're very careful when we look at the different situations where a contractor just made a routine error and is not penalized because of it. And so what Miguel said is a substantial compliance doctrine was also something that was looked at. It's very effective. Did a contractor realize there was a problem with their license, and did they take quick steps to resolve and correct that problem? And if so, then they would be entitled to payment.

I have not personally had the complaints that I had more than three years ago in the last three years regarding that statute.

Okay. Senator Ross?

Well, of course, what the contractor state license board does can be different than what a Superior Court does somewhere interpreting the statutes that we have on the books.

So, in the case of an inadvertent lapse, good faith, applying whatever standard you want to it, I assume you all would support then a change to business professions code, section 7031 B, which currently says a person who utilizes the services of an unlicensed contractor may bring an action in any court of competent jurisdiction in the state to recover all compensation paid.

So in the event of a lapse during the performance under a contract, the person who is bringing the action or is being sued as a defense, could claim that no compensation was due at all for the work performed, even work performed during the time that the contractor complied with all of the requirements of the contractor's license.

Yeah. And that was something that we looked at a few years ago.

I mean, the theory being that are you not entitled to payment at such time as you had a valid license. And our board thought: well, yes, you should be.

So you're doing it. But we do need to change the statute. Would you agree?

And that is something our board looked at previously, and it might be maybe an opportunity to meet with industry and legal leaders and look at that and see how it could be more equitable.

Good. Thank you, Madam Chair.

Madam Chair.

I think you've touched on something. I thank my colleague. But in the real estate industry, there are disclosure forms. Maybe in the contract from the contractor to the consumer that it indicates my license number is, and it is due to expire on this date, which, let's say 24 months. However, the job will consist of, and it'll take two months to finish. So there's plenty of window.

Yes.

So it's never an expiration question because the consumer knows that it's a 60 day job, but his license is still good for two years, whatever. And it's a simple form. Maybe you ought to think about the Association developing a standard form like we have in the real estate industry. The California Association of Realtors has lots of forms, believe me. And maybe if you had some adopted forms that are pretty standard across the state that are consumer protected and also the contractor as well.

But disclosure up front, my thought.

I think the issue here is whether or not 7031 needs a slight modification or not. So just as we listen, maybe you can help us with that. All right, we're going to turn to public comment then, and I'm going to ask folks to be succinct and brief and not repetitive.

Thank you, Madam Chair. Danny Curtin, California Conference of Carpenters. Thank you for the discussion. We support your recommendation of taking a look at that statute? If I may take 1 second to ask about your first question. After the 1989 Loma Prieta earthquake, Senator, Assemblywoman Delaney Easton carried a bill for us to make fraudulent contracting during emergency circumstances a felony. Didn't pass that way, but it did raise the penalties. It might be worth taking another look at that.

These fires are just ridiculous, and it's time to clamp down on that. Thank you.

I appreciate that. Thank you. Welcome.

Afternoon, Madam Chair Members. James Thuerwachter with the California State Council of Laborers. Appreciate the discussion. We represent about 80,000 men and women who work in the heavy construction industry throughout the state. So we proudly support CSLB and its enforcement of state contracting laws, as well as its efforts in leveling the playing field for contractors who actually play by the rules with that; there's a recent study that notes that one in 10 Californians haven't fallen victim of a contractor scam that goes to Senator Archuletta's point.

So we do encourage the state to continue supporting the CSLB in these efforts to combat that. Thank you.

Thank you.

Madam Chair.

How are you doing?

Hi.

Members of the Committee, Rob Carrion. I'm with the Operating Engineers, Local Three. We are in favor and support the recommendations and everything that is being proposed in this sunset bill and, in particular, how the board is made up today. And it works well with the way that things are put together today with the board. So we appreciate. Thank you.

Good.

Thanks. Nice to see you, Mr. Carrion.

Nice to see you, too.

Good afternoon, Chair and Members. I'll be very quick, I promise. My name is Analise Rivero with California Trout. I'm here in regard to CSLB. Item number eight, the issuance of contractor licenses to tribes and tribally owned businesses. Cal Trout has almost 80 large-scale ground restoration projects, and it's absolutely critical that we have the ability to contract with tribal construction companies in order to meet the amount of restoration work that we have lined up.

Specifically, we work with the Yurok tribal construction company and would like the opportunity to further expand that work, especially given the amount of projects being done in their ancestral land. So as such, we support that update in code. Thank you.

Yes. Really important point. Thank you.

Hi, Chair and Members. Thank you for having us here today. I'm Larissa Petrucci. I'm a Policy and Research Analyst at Norcal Construction Industry Compliance. We're a compliance organization that helps to ensure a level playing field in construction, especially in public works.

And we just want to speak in favor of the recommendations in the sunset bill, particularly the recommendations regarding BPC 7059. We really want to see contractors have the appropriate licenses on the job and we want to speak in favor of the continuation of the CSLB board. Thank you.

Thank you. Thanks for being here.

Good morning. My name is Phil Vermulen. I have represented the construction industry from the Builders Exchanges to the Fence Contractors, Flasher Barricade Association, the whole gamut. So I've worked closely with the contractors board for the last 43 years and their mission is extremely important. The underground economy is killing us and we've got to do more to go after those guys and gals. I mean, it's bad news. Let me talk briefly about 7031 because I know a thing or two about it.

I do a lot of expert witness for a lot of construction law firms. As a matter of fact, I have two different depositions to give on 7031 cases next week. One of the most egregious, to show you how bad 7031 is, is the Jacobs decision. I was involved in this case; it went all the way up to the California Supreme Court. In the Jacobs is one of the biggest contractors in California, and their in-house attorney decided they had too many contractor licenses, so he merged all the licenses together. The problem was Jacobs was doing work for the court system, remodeling some public works jobs. Somehow the attorney general caught that the license number that they contracted with Jacobs for was not the right one. It was different. The state of California went after Jacobs Engineering over 7031 Jacobs and went all the way to the California Supreme Court.

They lost $25 million, all because of a license number. So when you talk about draconian, 7031 can be extremely draconian, and I see a lot of it. So, yeah, we absolutely have to address that this year, and I look forward to working with you with it. Thank you.

All right. Thank you very much. That's it from the public. All right, very good. Thank you all so much. Hey, nice work. That's pretty good. High five. Okay. All right. I want to thank all of the Members and of course, colleagues. Thank you for being here and everybody who provided testimony and to the public. You did a great job being succinct and feel like we learned a lot today and we are off and ready to go.

If you are not able to testify in person today, please submit your comments or suggestions in writing to the Senate Business, professions, and Economic Development Committee or the Assembly Business and Professions Committee or visit the committee's websites. Your comments and suggestions are important to us, and we want to make sure that you're included. Thank you. We appreciate you all very much. Appreciate your patience and cooperation to move through a hearing today. And that's it. We are adjourned.

All right. Well done, all.